Ross McEwan, chief executive of RBS, said putting its legacy litigation issues behind it remained a key part of its strategy

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Royal Bank of Scotland has set aside a further £3.1 billion to cover claims and fines relating to its sale and underwriting of US residential mortgage-backed securities.

The 72 per cent state-owned bank said the provision takes the total set aside to cover mortgage-backed securities investigations and litigation to $8.3 billion (£6.7 billion).

RBS said it remains in talks with US Department of Justice on a settlement for its role in selling toxic residential mortgage-backed security (RMBS) products, which could result in “substantial” additional provisions being taken.

The Edinburgh-based bank notes in full year results last year it was still facing “more than 20 US class-action lawsuits relating to $43 billion of mortgage-backed securities.

RBS said is considers it “appropriate to take the provision now” in relation to the Department of Justice investigations as well as other RMBS-related litigation matters.

RBS remains in talks with the US Department of Justice on a settlement for its role in selling toxic mortgage products (Image: PA)

UK Financial Investments, the arms-length body managing the stakes in banks taken during the financial crisis, have previously estimated the US Department of Justice fine could be in the region of $12 billion (£9.4 billion), given the scale of RBS's role in the RMBS mis-selling scandal.

German banking giant Deutsche Bank and Swiss group Credit Suisse agreed a settlement settle in December for their role in the mis-selling of toxic mortgage-backed securities, paying a combined $12.5 billion (£9.9 billion).

However Barclays refused to agree a settlement and the Department of Justice is now taking legal action against the bank.

The £3.1 billion will be included in the bank's fourth quarter results, putting the lender on track to deliver a ninth consecutive year of annual losses.

The bank had already racked up £2.5 billion in losses in the first nine months of 2016 and the latest misconduct provision will likely see full-year losses widen substantially.

RBS has posted losses of more than £50 billion in the past eight years.